Beginners guide to Spread Betting

This is a discussion on Beginners guide to Spread Betting within the Spread Betting & CFDs forums, part of the Commercial category; (This may seen over simplified or obvious but it&#8217;s my experience)
So you think you want to get into spread ...

7)
If you find yourself opening positions out of ‘greed’ then your strategy is flawed

8)
If you find yourself closing positions out of ‘fear’ then your strategy is flawed

9)
If you find your self seeking holy-grail advice on how to trade profitably then
you don’t even have a strategy!.

10)
There is ‘no’ express route to trading successfully.
Trading is like trying to fly a Boeing 747: if you don’t understand the
weather conditions that can affect you (i.e the market), and don’t understand the controls
(i.e your strategy) and don’t know where the escape exits are (i.e stop losses)
then you will eventually CRASH AND BURN!

There is no substitute for doing your own hard laborious research,
..back test ..back test, and back test ..even more! Profitable trading
is not just about making a trade, it’s also about knowing when not to trade.
It sound obvious, but how many times have you opened a position because
it looked 'right' only for it to go against you? Do you even know why the market
went against you?

Note, for every trade you lose, you’re down the spread (e.g. 2pts) plus your stop-loss
e.g. 5pts) = 7pts. You’d better have a winning strategy! otherwise each time you loose you’ll have to win back 7pts x stake just to break even!

If your can prove to yourself that your procedural strategy works something like 75% of the time -
(i.e. 3 out of 4 trades) on back tested data/charts, and shows consistent, controlled gains (not just a lucky winning streak) then you ‘may’ just have a working strategy.

Very sound advice there. I would also suggest that if a beginner is looking for a demo account they try one with a real-time charting package. (CMC have one).

This makes trading a strategy and testing it over time more accurate. If you are trading on only a bid and offer price with a trading demo, and using free charts that lag behind in time - such as Yahoo, then your're on a hiding to nothing. No strategy will ever work in these circumstances.

If your strategy involves candlesticks, support & resistance levels etc, then you need to be able to see them on a chart in relation to the current market action.

I totally agree that if you cannot write down your trading strategy then it will not work. Your strategy needs to be concise and understandable and it also needs a money management strategy. How much are you willing to risk on each trade? 1% of the capital is the norm - 2% at the outside.

I would also recommend keeping a trading diary as well. This can be done by jotting down your reason for entering a trade at that particular time, what your projections are for the exit. Then monitor what happened and how accurate your trade was and how much profit/loss it made. Start a new page for each day and you will soon see a pattern emerging. Trading the candlesticks more than the indicators etc. Writing it down as it is happening can clarify your thoughts as well.

Just my two penny's worth.

__________________Jill

"The first step to getting the things you want out of life is this: Decide what you want"

Thanks for that, I am a novice who will be entering the world of spread betting soon!

I have read some information on the capitalspreads website. They say they would not be able to guarantee your stop loss, why is this?

Some spread betting companies have a Guaranteed Stop Loss feature. Capital spreads just don't happen to offer one. IMO the standard stop loss they offer is good enough, but then again, I only trade FOREX rather that more volative stocks/indices. There is less change of a massive & sudden contrary move spiking way pass your intended stop loss and leaving you further out of pocket than planned. That's the main difference between standard and guaranteed.

Yes, it can still hapen in forex but it has never happened to me as forex trends fairly well.
If you're really nervous about your position ever being closed-out several points pass your specified stop loss then I'd say look for a service with a GTS feature.

Ash.

__________________I love work! It fascinates me.. I can sit and look at it for hours.

One other question for you. What would you recommend a novice to practice and eventually start trading with.. Shares, equities, indices or forex? I was thinking forex as you mentioned above it is the least volatile. Is there any information for example past trend data available online and anything else that would allow a newbie to create a trading strategy?